$2$

Which of the following statements is TRUE?

$1.$ In the flow$-$to$-$equity valuation method, the project's free cash flows are discounted using the equity cost of capital

$.2.$ Firms with a target leverage ratio adjust their leverage to maintain a constant equity$-$to$-$value ratio.

$3.$ When a firm has permanent debt, we can discount the interest tax shields using the cost of debt.

A$)$ Statement $1.$

B$)$ Statement $2.$

C$)$ Statements $2$ and $3.$

D$)$ Statements $1,2$ and $3.$